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5 reasons to get credit cards for your teenagers

By Kathryn Hawkins

I remember my first day of college well: Unloading my bags in my cubicle-sized dorm room, giving my mother a hug goodbye, and of course, checking out the credit card booths in the center of campus, where countless representatives offer free T-shirts and thousands of dollars worth of credit without explaining exactly how those shiny cards work. Although some of the best credit cards for students can be found there, most students, myself included, were looking for the free stuff.

Luckily, I managed to keep my credit card debt under control--but a lot of my friends got into financial struggle that they're still struggling to escape from a decade later.

Want to help your teenagers learn financial responsibility before they head off for the wild world of college? Then consider making them authorized users on your credit card account while they're still under your roof. You may worry about them racking up huge bills, but in fact, teaching your children how to manage credit now with no fee credit cards linked to your account will help them avoid getting into debt later. Here's why you shouldn't be afraid to hook your kids up with credit cards.

A supervised environment is the best place to start. A student credit card is all too often many people's first exposure to credit cards. However many find themselves unprepared since they often have little understanding of cards' payment terms and interest rates. As a result, students often get in over their heads: In a 2008 survey, Sallie Mae found that the average college student carries $3,173 in credit card debt.

By giving your children access to credit cards while still under your supervision and teaching them how to use the cards responsibly, you can help them understand the importance of paying their bills on time. When they start college, they'll have a leg up, and know not only how to find the best credit cards for students, but how to manage them.

You can provide a full financial education. When your children's monthly credit card bills arrive, sit down with them and go over their purchases, interest, and any other fees on a line-by-line basis. This will train them to pay close attention to their bills, and help them gain a good understanding of what they're spending. Additionally, discussing the dangers of credit card and identity theft will help them watch for unauthorized purchases on their cards, and will encourage them to safeguard their personal information.

An early start can lead to a better FICO score. Your FICO score relates to how risky you are as a candidate for a loan, and is based on an analysis of your credit history that focuses on how long you've held credit cards and whether you've made timely payments. By establishing a credit history while still in high school, your children will be able to build a higher FICO score, which will help them get better interest rates on loans for cars or homes in the future.

Once they start building a score, be sure to show them how they can get their free credit score to make continued progress towards building credit.

Responsible money-management can help teens learn to be responsible in other areas of life. By teaching your teens about budgeting and staying on top of bills, you'll help them develop their analytical skills and help them adapt to a daily routine. The lessons they learn from this process will serve them well in all facets of life, from academia to their future careers.

You can help your teens understand that credit cards are not free money. Payment via credit card feels abstract to many young people; they often find it hard to remember that their credit card balances must be paid in full to avoid high interest rates. As a result, they spend far more than they can afford, and are often completely unable to pay off their debts: According to the Senate Committee on Banking, Housing and Urban Affairs, individuals 25 or younger are the fastest growing group of bankruptcy filers.

By teaching your teens to pay their credit card balance out of their allowance or job earnings each month, they'll have a far better awareness of what they're doing when they tell a cashier to "charge it"--and won't end up underwater.

Kathryn Hawkins is a writer and editorial consultant from Maine who has written for publications including BNET, GOOD Magazine, Charles Schwab's On Investing, and TD Ameritrade's Enlightened Investor.

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